Shanker Singham, of the Legatum Institute, has written an article for the website Politico (HERE). Legatum is regarded by many as a rather shadowy right wing think tank that has far too much influence in the present government. It is and was openly pro Brexit so you can see how stupid it is. Matthew Elliot, the Leave campaign CEO is now a senior fellow of Legatum, which says it all really.
Mr Singham's article shows the same sort of deluded thinking that went into the first phase of the negotiations. It is that we are in a strong position and it's only "a matter of time" before the EU adopt a far more emollient and conciliatory position and give us what we want. He is still focused on tariffs which are perhaps the least of our worries. It is unlikely that we'll leave without some kind of FTA, even if this takes five years. The real problem is in the non tariff barriers which he ignores completely and which are unavoidable when we become a third country.
At the extreme end of Brexit there is this belief we are something special. An exceptional nation that deserves special treatment. We want frictionless trade with the EU but because they won't buy enough of our goods we must also have the right to conclude trade deals ourselves with non EU countries. We don't want to be on a level regulatory playing field, it must be tilted in our favour. And we don't want to have any judicial body overseeing what we do or pay into the budget that makes the single market work. We must have all the benefits with none of the responsibilities.
Leatum's Special Trade Commission's chairman is sufficiently deluded to think we'll get it all too. He concentrates on the potential losses in the EU but ignores the much greater losses on our side. It is rather like sitting round the fire on the eve of battle trying to lift your spirits.
Of course a no deal Brexit would damage the EU, but conceding a special deal will damage it more in the long run.
In the same vein, Patrick Minford has a lot to answer for. He is the man behind Economists for Brexit and The Sunday Express splashed last weekend (HERE) with one of his "reports" suggesting the EU (the EU, not the UK) would lose £500 billion if we walk away with no deal. This is an amazing claim even by the standards of The Express, a newspaper given to lurid headlines about aliens and extreme weather predictions that never materialise. It describes the news as a "Brexit Shock". It would be, if it was true.
Needless to say, no one outside of a mental institution expects the EU to lose £500 billion either.
Minford makes some highly simplistic assumptions and among them he assumes our GDP would "spike" by 9% if we walk away and trade on WTO terms. I don't see this forecast by any other economists. One is bound to ask why anyone, anywhere ever bothers to negotiate trade deals at all if the result without one is a spike in GDP. Minford's model seems to indicate trade deals are actually barriers to trade, and he would agree with this since his philosophy is to eliminate all tariff and non-tariff barriers. This would result in a chaotic situation for years as whole industries in countries were wiped out, while other, lower cost producers boomed. Eventually, everything would perhaps settle down but we may well find ourselves wholly dependant on other countries for food, or electricity, or clothing. How you feel about this will depend on your world view but some people may not be totally relaxed about it.
However, his reports provide the basis for great stories in the pro Brexit press.
Fortunately, The Express and Politico have only a small readerships but no doubt a few hundred thousand will be taken in by a stories that purport to suggest the EU are absolutely desperate to do a deal with us at any cost.
